Digital information is the lifeblood of most businesses.
What many businesses do not factor into their data retention policies is that digital information is evidence under our Evidence Act.
As many business records and communications today exist only in digital form, if there is a dispute, electronic discovery is as important, if not more important, than discovery of printed material.
Often electronic records, particularly emails, PowerPoint presentations and similar presales records, are vital to establishing what happened on claims of misleading and deceptive conduct under the Fair Trading Act. In this type of situation electronic records can be the only record of what really happened.
Preparation, by reviewing these records, is essential. Failure to review the evidence that could answer the question “what happened” would almost certainly be negligence on the part of the lawyers. Furthermore, as we have discussed in previous columns (see www.clendons.co.nz), failure to identify that the evidence existed, even if the evidence has subsequently been destroyed, is now leading to severe sanctions by the courts.
The process of collecting and collating business records and communications (that are in the form of electronic evidence) from key people that surround the transaction in dispute is therefore increasingly important in determining the outcome of a claim or lawsuit.
For many companies, this means getting key personnel to copy relevant electronic documents (normally emails) into a file storage format, export transaction records into a flat file or commonly used database format and sending the resulting files to the lawyers.
Best practice is for a clear written instruction on what has to be preserved and how the electronic information is to be collected. This instruction should be issued to all key personnel who might have been involved in a matter in dispute.
If information has been deleted, then the data gathering process may involve the company’s IT department resurrecting and reproducing backup files or engaging computer forensic specialists. Affidavits might have to be sworn that information exists and can be retrieved from from a variety of media. To omit reference to evidence just because it is on a backup is swearing a false affidavit. Swearing a false affidavit is a form of perjury (lying to the courts), which is a serious criminal offence that carries a possible prison term on conviction.
Information may also be scattered on servers located in different parts of the organisation or the world and, again, just because the information is outside New Zealand, does not mean that it is not discoverable and need not be disclosed to the courts.
The fact that in some disputes documents might number in the tens of thousands does not excuse anyone from complete discovery.
The good news is that the cost and time burdens of discovery can be eased with the use of electronic tools. We use Discoverer, which has wizards that can automatically disassemble Microsoft proprietary format PST files containing emails that may have been collected, or disassemble project plans. The wizard extracts the emails or tasks individually, cataloguing and indexing each during extraction.
The PST file format is a good example of some of the tricky issues that are now arising as electronic evidence becomes central to solving disputes.
While the provability of evidence is not the key consideration in commercial discussions, once a dispute becomes part of the court process the formal processes required by the Evidence Act to prove the evidence must be observed.
The courts in the past have applied a strong filter to evidence placed before them, in the form of the "best evidence rule". The courts would not admit a copy if an original existed. This rule, while still a guiding principle, has been relaxed for some time and the courts tend towards a more pragmatic approach, particularly in cases involving electronic evidence.
While the "best evidence rule" is still referred to in arguments between lawyers on the quality of the available evidence, a more pragmatic approach has been adopted for over 30 years, as illustrated by the1969 case of Garton v Hunter in which the controversial English judge, Lord Denning, said:
“Nowadays we do not confine ourselves to the best evidence. We admit all relevant evidence. The goodness or badness of it goes only to weight, and not to admissibility.”
This pragmatic approach is even more important when there may be huge volumes of electronic evidence and because the "original" often cannot be practically "produced" to the court.
The concept that the original cannot be produced is demonstrated by absurdity. Take the example of an original journal entry stored in a large database. Producing the original database is impractical because the court would have to establish the hardware and software environment to access the original database. While not impossible, this would be costly and an unnecessary use of resources. What happens, if the lawyers understand the issues and work together with commonsense, is that an extract containing the journal is made in an agreed way so that it can be produced to the court as the agreed copy of the original record.
This returns us to the subject of emails and the Microsoft PST export file format.
The PST file format is the easiest way to collate email from MS Outlook/Exchange mail systems. It is, however, a proprietary file format – a "black box".
If the issue of quality of an email as evidence comes into question, the lawyers cannot, because the file format is closed or a black box, prove that the version stored in the PST is the same as the original.
The solution here is to seek to verify any key email by going back and comparing it with the version as stored originally in the Exchange database.
This last point closes the circle in relation to evidence. For the reasons set out here, storage and destruction policies need to take into account that, one day, being able to prove that business records can be relied on as good evidence of what took place, may be essential. The outcome of many business claims or disputes can hang on an email or an accounting record and will be even more likely to do so as technologies based on XML proliferate and, as an ever popular target, if IT can not prove the integrity of its data retention, it may end up wearing the blame for a loss.
Horrocks is a partner and Woo a solicitor in Clendon Feeney’s technology law team.